Living in a culture where consumerism abounds, parents have a responsibility to teach their children smart money habits while they are still young. By investing this time with small children, parents can ensure a long, healthy relationship with money over the course of a lifetime. The holidays are perhaps the most powerful opportunity to speak to kids about money and how it should be used. With shoppers in a frenzy over the latest goods and products, and stores overflowing with ads, items, and more, now is the right moment to have a serious chat about saving money and using it wisely. Use these simple tips to make the right impression on your children.
Presenting a Choice
Many children do not understand the importance of money, believing it comes in abundance from mom or dad’s pocketbook. With so many focused on buying gifts at the holidays, many parents choose to give their children a small amount of money to use for a small gift for a relative, such as Grandma or a sibling. In turn, parents can teach effective budgeting techniques.
Children who do not understand how much the money is worth will likely bring a few different items to the table. Parents should use this opportunity to demonstrate how the money can buy one of a certain product or a few of another. This shows the child that money can be exchanged against different goods with various values, and may instill healthy habits for saving money.
Letting Children Decide
The role of the parent is to help guide the child in the right direction, rather than make a decision for them. After explaining how money can be used, it is important to let a child make the decision on his or her own. Not only will such decisions carry more weight in their eyes, but it will help them to begin developing the thinking skills needed to manage money effectively.
Exploring the Value of Gifts
With a huge pile of new toys and gifts likely piled under the tree, the holidays are the perfect moment to explain that certain goods have certain values. If a young child still believes in Santa, it may be difficult to find the right balance between explaining the monetary value of an item and saying it has come from him. Nevertheless, a bit of creativity should be able to clear any hurdles, giving the child a healthy understanding of the value of everyday items.
Teaching children about money is not a one-off event. Instead, these conversations should be had again and again, as a child is taught about saving money and spending responsibly. Using the opportunities that arise at the holidays, parents can easily transform special occasions into a learning moment for their young children. Together with continual instruction in this area, a young child has the potential to develop money habits that will lead to a happy and fulfilled life.